Subsequent Events | 6 Months Ended |
Jan. 31, 2013 |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
NOTE 6 - SUBSEQUENT EVENTS |
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In accordance with ASC 855, Subsequent Events, the Company has evaluated subsequent events from February 1, 2013 through March 12, 2013, the date of issuance of the financial statements and has determined that it does not have any material subsequent events to disclose other than the matters disclosed below. |
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In February 2013, the Company entered into three-year endorsement agreements with two sports figures who have agreed to endorse the Company and its products for an aggregate of 1,027,500 restricted shares of the Company’s common stock plus an additional 607,500 contingent restricted shares based on certain performance criteria. The Company will record marketing expenses of about $15,000 in February 2013 in connection with these contracts. |
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Sponsorship of Texas versus The Nation football game |
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On January 4, 2013 the Company entered into an agreement to be the 2013 Title Sponsor of Texas vs. The Nation which was held on February 2, 2013 at Eagle Stadium in Allen, Texas. In consideration for its sponsorship, the Company has given Overtime Marketing SE, LLC the right to purchase 5,000,000 restricted shares of its common stock at a price per share equal to 125% of par value ($.001) to be paid in US currency at time of acquisition. The shares will be made available for sale upon the following schedule: |
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- 1,250,000 shares at the time of execution of the formal Sponsorship Contract; |
- 1,250,000 shares 180 days after execution of Sponsorship Contract; |
- 1,250,000 shares 360 days after execution of Sponsorship Contract; and |
- 1,250,000 shares 540 days after execution of Sponsorship Contract. |
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The Company will record an expense equal to all the shares covered by the Sponsorship Contract based on the price of Company shares on the date of the Game which will result in a recorded expense of approximately $250,000. |
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Prepaid expenses of $10,861 at January 31, 2013 in the accompanying Consolidated Balance Sheet all relate to this sponsorship and will be expensed at the time of the game. |
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Convertible Note |
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On February 27, 2013, the Company entered into a $335,000 convertible loan agreement. The agreement provides for a $35,000 original issue discount. The lender, at its discretion, may provide funds up to $300,000 to the Company. It provided $60,000 at the closing of the agreement. All loans under the agreement are payable in full one year after the funds are issued together with a prorated portion of the original issue discount. All amounts outstanding under the agreement become convertible, at the lender’s discretion, into shares of the Company’s common stock starting 180 days from the execution date of the agreement. The conversion rate per share is the lower of (i) $0.044 or (ii) 60% of the lowest trade price during the 25 trading days prior to a conversion notice. The lender has agreed that it will not execute any short trades and, at not time, will hold more than 4.9% of the Company’s outstanding common stock. |
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If the Company repays all amounts outstanding under the agreement within 90 days of the execution date, there will be no interest amounts due. If it does not pay all amounts due within 90 days of the execution date, it cannot make any other prepayments of the amounts outstanding without the consent of the lender. In addition, there will be a one-time interest charge of 12% of the amounts outstanding. The Company must also register all shares that are issuable under the agreement in any Registration Statement that it files with the SEC for any purpose. |
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The Company is negotiating with other potential funding sources, the proceeds from which, if received, would repay all amounts due under this agreement within 90 days of the execution date. If all amounts are repaid within the 90 day period, the agreement will be considered terminated and all convertibility features would no longer exist. |